Power and hand tool demand in the United States is projected to rise 3.1 percent annually through 2011, reaching $14.3 billion, according to a report released February 20 by the Freedonia Group. Advances will result from product innovations, especially the development of higher-voltage lightweight cordless electric tools. In addition, gains will result from continued interest in do-it-yourself and hobby activities in the consumer market, especially among women. The development of new consumer-friendly battery-powered tools, such as wrenches and clamps, will spur gains. Rising nonresidential building and non-building expenditures will also create opportunities. However, weak residential construction activity (including an outright decline in new housing starts) will limit gains. A flat outlook for construction and manufacturing employment will also dampen growth. Despite rising demand, production of power and hand tools in the U.S. will remain flat, as producers expand offshore production in lower-cost nations such as China.
Power tool demand is forecast to outpace hand tool demand due to the continuing popularity of cordless electric products such as saws, sanders, polishers and grinders. Hand tool demand is limited by the inherent durability of these products. Unlike power tools, common household tools such as hammers frequently outlive their owners, dampening replacement demand. In addition, product innovation is less common than in power tools, limiting opportunities for value gains.
Cordless products will continue to post the best gains, benefiting not only from macroeconomic factors but from their performance advantages vis-à-vis plug-in models. The development of improved battery technology, such as lithium-ion chemistry, will encourage both consumers and professionals to use cordless technology.
Professional users accounted for more than two-thirds of overall tool demand in 2006. Professionals use a greater variety of tools, most of which are also more expensive than those used by consumers. However, growth in consumer tool demand will outpace the professional segment, benefiting from the ongoing popularity of do-it-yourself activities and the trade-up by consumers to feature-laden power tools.
U.S. production of power and hand tools has been adversely affected by competition from imports. Asian countries are leading suppliers of power and hand tools due to their labor cost advantages relative to the U.S. In particular, China has become the major source of U.S. imports, with more than 40 percent of the total in 2006. U.S. production of electric tools has been drastically reduced by outsourcing of production to lower-cost nations. The U.S. remains a major producer of hand and pneumatic tools, and producers in these categories have sought to improve export opportunities in markets such as Asia, Eastern Europe and Latin America.
More than 1,000 firms are active in the U.S. power and hand tools industry, ranging from small, privately owned firms to major corporations. Black & Decker, Stanley Works, Techtronic, Bosch, Danaher and Snap-on accounted for nearly 55 percent of sales in 2006. Most firms in the U.S. industry operate primarily in either power tools or hand tools. In addition, many have manufacturing operations in China. The power tool market has six leading producers – Black & Decker, Techtronic, Bosch, Emerson Electric, Hilti and Makita – that combined accounted for nearly 70 percent of total sales in 2006.
The hand tool market is even more concentrated, with four leading participants – Stanley, Danaher, Snap-on and Cooper – accounting for two-thirds of 2006 sales.
“Power & Hand Tools” (published 02/2007, 262 pages) is available for $4,500 from The Freedonia Group Inc., 767 Beta Drive, Cleveland, OH 44143-2326. For further details, contact Corinne Gangloff by phone 440-684-9600, fax 440-646-0484 or e-mail pr@freedoniagroup.com. Information may also be obtained through www.freedoniagroup.com.
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